A LevelBusinessAQARevision NotesStrategyGlobal StrategyEntering international markets

Entering international markets (AQA A Level Business): Revision Note

Syllabus Edition

First teaching 2026

First exams 2028

Exam code: 7132

Lisa Eades

Written by: Lisa Eades

Reviewed by: Bridgette Barrett

Updated on

Exporting

  • Exporting is the selling of goods or services produced in one country to customers located in another country

    • A business manufactures or supplies the product at home

    • It finds overseas buyers, usually through agents, distributors, trade fairs or online platforms

    • The firm handles (or outsources) tasks such as packaging for international transport, arranging shipping, completing export paperwork and complying with foreign regulations

  • Exporting is the simplest step into international trade

    • The product is still made in the home country

    • Only marketing and delivery cross national borders

Advantages and disadvantages of exporting

Advantages

  • Extra sales revenue

    • Overseas customers add to total demand and income

  • Economies of scale

    • Higher output for export can lower average costs

  • Risk spreading

    • Sales in other countries can offset a fall in revenue at home

  • Builds reputation

    • Selling abroad can raise the brand’s profile worldwide

Disadvantages

  • Transport costs

    • Shipping goods long distances is expensive

  • Complex paperwork

    • Export licences, customs forms and product standards take time to meet

  • Exchange rate risk

    • Currency movements can reduce profit margins

  • Less market control

    • It is harder to manage marketing and customer service from afar

Licensing

  • Licensing is a legal arrangement where a business (the licensor) grants a foreign company (the licensee) the right to make or sell its product, use its brand name or make use of technology in return for a fee or royalty payment

    • The product is usually made and marketed by the licensee in its own country.

    • The licensee follows set standards to protect the licensor’s brand or patents

    • The licensor monitors quality and may exert some influence on strategy in the new market

Case Study

Kurkure

Kurkure is a popular Indian snack brand owned by PepsiCo.

In some parts of India, especially in smaller towns and rural areas, PepsiCo licenses the production and distribution of Kurkure to local food manufacturers.

Kurkure snack bags in Red Chilli matka flavour

  • PepsiCo allows local manufacturers to produce and sell Kurkure under its brand.

  • The local firms must follow PepsiCo’s strict quality and branding standards.

  • In return, these firms pay royalties to PepsiCo for the right to use the Kurkure brand

Advantages and disadvantages of licensing

Advantages

  • Low capital investment

    • No need to build factories overseas

  • Faster market entry

    • A licence can be signed more quickly than setting up a subsidiary

  • Steady royalty income

    • A steady flow of income with limited ongoing effort

  • Uses local expertise

    • The licensee already understands its home market

Disadvantages

  • Less control

    • Quality and brand image depend on the licensee

  • Risk of creating a competitor

    • The licensee learns the know-how and may break away and set up their own business

  • Limited profit share

    • Royalties are only a fraction of potential full market profits

  • Difficult to monitor

    • Enforcing intellectual property rights abroad can be costly

Joint ventures

  • A joint venture is a medium- to long-term agreement for two or more separate businesses to join together to achieve a defined business outcome, such as entry into a new market

    • A new combined business structure is formed 

    • Risks and returns are shared by the parties involved in the joint venture

    • Businesses in a joint venture are usually looking to benefit from each other's strengths and resources brought to the venture

  • Some UK and EU companies have set up joint ventures with businesses in China

    • Chinese managers and employees understand market needs and consumer tastes, which gives the venture a greater chance of success

    • The Chinese government encourages joint ventures rather than foreign direct investment (FDI)

Example

In 2023, Stellantis, the parent company of Vauxhall and Peugeot, formed a joint venture called Leapmotor International with Chinese electric vehicle maker Leapmotor.

Stellantis holds a 51% stake and gains access to Leapmotor's low-cost EV technology and manufacturing scale

Leapmotor benefits from Stellantis's international dealer network and expertise to sell its vehicles across Europe and other markets outside China

Advantages and disadvantages of joint ventures

Advantages

  • Each partner in the joint venture benefits from sharing expertise and resources, such as distribution channels and R&D expertise

  • Joint ventures are less risky than 'going it alone' if  entering a new market or diversifying

  • Local knowledge can be accessed when one of the joint venture partner companies is already based in the country

  • Costs are shared between joint venture companies, which is very important for expensive projects

Disadvantages

  • If the joint venture is successful, profits have to be shared between the partner businesses

  • Disagreements may occur between managers in both businesses

  • The objectives of each business may change over time, leading to conflict between joint venture partners

  • If the joint venture fails, it may need to be dismantled, reorganised or sold, which is likely to take significant time and resources

Direct investment

  • Direct investment, often called foreign direct investment (FDI), is when a business sets up or buys assets, such as factories, offices or shops, in another country

  • Typical forms of direct investment include

    • Greenfield investment

      • Building a brand-new site from the ground up

    • Acquisition

      • Buying an existing foreign firm to gain its sites, staff and customers in one go

    • Major expansion

      • Turning a small overseas branch into a full production base

Examples of UK businesses making direct foreign investments

Business

Explanation

Jaguar Land Rover

  • In 2018, JLR opened a brand new £1bn assembly plant in Slovakia

    • The greenfield investment gave JLR full control over production close to key European customers

    • It also freed-up space in its crowded UK factories

Tesco

  • Britain’s largest supermarket chain has spent more than two decades building and expanding hypermarkets in Hungary and the Czech Republic

    • These stores, distribution centres and local head offices were financed directly by Tesco

Advantages and disadvantages of direct investment

Advantages

  • Full control

    • The parent company decides on quality, branding and day-to-day running

  • Keeps all profits

    • No need to share sales revenue with partners

  • Closer to customers

    • Making products locally can reduce delivery times and avoids tariffs

  • Access to local resources

    • The firm can use skilled labour, raw materials or government incentives such as tax reductions

Disadvantages

  • Very high cost

    • Buying or building abroad needs a lot of money up front

  • Risk exposure

    • Political changes or recessions in the host country can hit the investment hard

  • Management complexity

    • Running operations far from home requires more coordination

  • Cultural and legal hurdles

    • Unfamiliarity with laws and business customs can slow decisions and raise costs

Case Study

Halden Appliances

Halden Appliances logo with a large stylised dark grey letter H above the brand name in modern uppercase lettering on a white background

Halden Appliances is a UK manufacturer of kitchen appliances that decided to build a brand-new factory in Poland through a £45 million greenfield investment, rather than continuing to rely solely on contract manufacturers in Asia.

The new site gave Halden full control over production quality and allowed it to redesign processes specifically around its own products, while also placing it much closer to its largest customer base across mainland Europe, reducing delivery times and avoiding import tariffs.

Because Halden owned the factory outright, it kept all the profit from sales in the region rather than sharing returns with a local partner. However, the investment required borrowing a significant sum, increasing the company's financial risk during construction.

Early progress was slower than expected, as UK managers sent to oversee the project struggled with unfamiliar Polish employment law and local business customs, delaying full production by several months.

A sudden downturn in European demand shortly after opening also left the new factory running well below capacity for its first year.

Despite this difficult start, the factory later became Halden's most efficient site.

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Author
Reviewer
Lisa Eades

Author: Lisa Eades

Expertise: Curriculum Expert

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

Bridgette Barrett

Reviewer: Bridgette Barrett

Expertise: Development Editor

After graduating with a degree in Geography, Bridgette completed a PGCE over 30 years ago. She later gained an MA Learning, Technology and Education from the University of Nottingham focussing on online learning. At a time when the study of geography has never been more important, Bridgette is passionate about creating content which supports students in achieving their potential in geography and builds their confidence.